New Credit is the new account opening activity and any recent ‘hard’ credit inquiries from lenders on your credit report. Approximately 10% of a FICO® Score is based on this information.
FICO’s research shows that opening several credit accounts in a short period of time represents greater risk—especially for people who do not have a long credit history. In this category a FICO® Score takes into account:
- How many new accounts have been opened.
- How long it has been since a new account was opened.
- How many recent requests for credit have been made, as indicated by inquiries to the consumer reporting agencies.
- Length of time since inquiries from credit applications were made by lenders.
- Whether there is a good recent credit history, following any past payment problems.
Looking for an auto, mortgage or student loan may cause multiple lenders to request your credit report, even though you are only looking for one loan. In general, FICO® Scores compensate for this shopping behavior in the following ways:
- FICO® Scores ignore auto, mortgage, and student loan inquiries made in the 30 days prior to scoring. So, consumers who apply for a loan within 30 days, the inquiries won’t affect the score while rate shopping.
- After 30 days, FICO® Scores typically count inquiries of the same type (i.e., auto, mortgage or student loan) that fall within a typical shopping period as just one inquiry when determining your score.